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IRS delayed action on progressive groups, too

This undated handout photo provided by the Internal Revenue Service (IRS) shows National Taxpayer Advocate Nina Olson. The Internal Revenue Service long has resisted efforts by an internal watchdog to help groups seeking tax-exempt status, creating a culture that enabled agents to improperly target such organizations for additional scrutiny, the National Taxpayer Advocate reported Wednesday. Olson, who runs the independent office within the IRS, said in her annual report to Congress that culture continues today, despite the scandal that has rocked the tax agency for more than a month. (AP Photo/Christopher Germano, IRS)

WASHINGTON (AP) -- Leaders of progressive groups say they, too, faced long delays in getting the Internal Revenue Service to approve their applications for tax-exempt status but were not subjected to the same level of scrutiny that tea party groups complained about.

Several progressive groups said it took more than a year for the IRS to approve their status while others are still waiting as IRS agents press for details about their activities. The delays have made it difficult for the groups to raise money — just as it has for tea party groups that were singled out for extra scrutiny.

But even with the delays, leaders of some progressive groups said they didn't feel like they were being targeted.

"This is kind of what you expect. You expect it to take a year or more to get your status because that's just what the IRS goes through to do it," said Maryann Martindale, executive director of Alliance for a Better Utah, a small non-profit that advocates for progressive causes. "So I don't know that we feel particularly targeted."

The IRS has been under siege since the agency revealed last month that agents had improperly targeted tea party and other conservative groups for additional, often burdensome scrutiny when they applied for tax-exempt status during the 2010 and 2012 elections.

This week, the IRS released documents showing that progressive and liberal groups may have been singled out as well.

On Wednesday, Nina Olson, the National Taxpayer Advocate, issued a report saying the IRS long has resisted efforts by her office to help groups seeking tax-exempt status, creating a culture that enabled agents to improperly target such organizations. The IRS responded by promising to work more closely with Olson's office.

J. Russell George, the agency's inspector general, released a widely-read report on the targeting of conservative groups last month. A day later President Barack Obama forced acting IRS Commissioner Steven Miller to resign.

George is now coming under fire from congressional Democrats because his report made no mention of progressive groups being targeted.

"There is increasing evidence that the May 14, 2013, audit was fundamentally flawed and that your handling of it has failed to meet the necessary test of objectivity and forthrightness," Rep. Sander Levin of Michigan, the top Democrat on the House Ways and Means Committee, wrote in a letter to George on Wednesday.

Karen Kraushaar, a spokeswoman for the inspector general, defended the audit.

The inspector general "was asked to look at the treatment of organizations known to be affiliated with the tea party in its review, and was asked to audit the way those organizations were being treated when they applied for tax-exempt status," Kraushaar said.

In a later interview, she said the audit focused on the criteria the IRS used to choose all applicants to examine for possible political activity — which could affect their eligibility for tax-exempt status.

"Our audit found tea party organizations were being selected out for scrutiny," she said.

George's audit was requested by Rep. Darrell Issa, R-Calif., chairman of the House oversight committee, and Rep Jim Jordan, R-Ohio, a senior member of the committee.

The IRS was screening the groups' applications because agents were trying to determine their level of political activity. IRS regulations say tax-exempt social welfare organizations may engage in some political activity but the activity may not be their primary mission.

To help flag groups for additional scrutiny, agents in a Cincinnati office developed lists of terms to look for in applications. These "be on the look-out" lists were commonly called BOLOs.

George's audit discovered a list from August 2010 that included the terms "Tea Party," ''Patriots" and "9/12 Project." The report said IRS agents inappropriately asked these conservative groups to identify their donors, their political affiliations and their positions on political issues, resulting in delays averaging nearing two years for applications to be processed.

Leaders of progressive groups said they, too, were asked detailed questions about their activities, which took time and resources to answer. But, several leaders said, they were not asked the inappropriate questions listed in the inspector general's report.

On Monday, Democrats on the House Ways and Means Committee released 15 BOLO lists, which changed over time and were dated between August 2010 and April 2013. The lists included the terms "Progressive," ''Medical Marijuana," ''Occupied Territory Advocacy," ''Healthcare legislation," ''Newspaper Entities" and "Paying National Debt."

The revelation that such a wide array of groups may have received extra scrutiny is threatening to undercut the narrative of some Republican lawmakers that the IRS targeted enemies of the president during last year's presidential election.

Kraushaar, however, noted that the term "tea party" included instructions to forward such cases to other agents for additional review. There were no such instructions accompanying the term "Progressive," she said.

"So what if anything was done with this progressive BOLO, I don't know. We don't know that," Kraushaar said.

The new acting commissioner of the IRS, Danny Werfel, said he has ordered agents to stop using all BOLO lists.

James Salt, executive director of the liberal group, Catholics United, said it took a total of seven years for his group to get tax-exempt status under section 501 (c) (3) of the tax code. The designation is more valuable than the one for social welfare groups because donations to these groups are tax-deductible. However, there are greater restrictions on political activity.

Salt said Catholics United first applied in 2005 but eventually withdrew its application after an extensive back-and-forth with the IRS. The group applied again in April 2010 and was approved in July 2011, he said.

Salt said the most onerous question from the IRS was for copies of all information the group planned to disseminate to the public.

"It's almost impossible to know what we will do," Salt said. "It didn't make any sense. How can we answer that?"

One IRS agent also asked some "weird" questions, he said.

"The nature of her questions were, questioning why Catholics would care about immigration and why Catholics would care about supporting the rights of immigrants," Salt said. "It almost seemed like there was suspicion that promoting Catholic social teaching as it relates to immigration reform was somehow suspect."

Sean Soendker Nicholson, executive director of Progress Missouri, said it took about 14 months for the IRS to approve his group's tax-exempt status, in December 2012. He said the IRS asked a lot of questions about the group's activities.

"It took a long time. We didn't think much of it," Nicholson said. "What I thought at the time was, there's a lot of new groups that have popped up in the election cycle and it's a good thing the IRS is scrutinizing these applications."